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Sinofert Holdings Limited Announces 2009 Annual Results

March 18, 2010

Hong Kong, March 18 /PRNewswire-Asia/ — The board of directors (the
“Board”) of Sinofert Holdings Limited (“Sinofert” or the “Company”, stock code:
0297.HK) today announced audited annual results of the Company and its
subsidiaries (the “Group”) for the year ended 31 December 2009.

    Financial Highlights

    -- Turnover decreased by 40.50% to RMB 27,011 million from 2008.
    -- Loss attributable to shareholders was RMB 1,444 million.

Overall Performance

Global demand for fertilizers remained weak in 2009 under the impact of
the financial crisis. As the largest fertilizer producer in the world, China
suffered from severe problems of over-production. Competition in the market
was very intense and fertilizer prices remained on a downtrend. In the face of
the difficult operating environment, the Group adopted prudent measures in
business operation and actively pushed forward the development strategy of
“centering on marketing and distribution and expanding into both production
and network distribution.” This strategy enabled it to benefit from a synergy
between upstream and downstream operations and to expand both its customer
base and market. The Group’s sales volume was 15.23 million tons last year,
representing a decrease of 6.07% from 2008. Turnover was RMB 27,011 million, a
decrease of 40.50% from 2008. It reported a loss of RMB 1,444 million, and
loss per share was RMB 0.2059. This was the first time the Group’s financial
performance declined after ten years of continuous growth, which was primarily
due to the losses derived from the sale of high-cost potash inventories
imported by the Group in 2008 and the write-down of inventories.

During the period under review, the Group sold 6.19 million tons of
nitrogen fertilizers, 3.69 million tons of phosphate fertilizers and 2.06
million tons of compound fertilizers, representing an increase of 3.15%,
25.63% and a decrease of 18.90%, respectively. It retained a leading position
in the high-end compound fertilizer market in China. Meanwhile, sales volume
of potash fertilizers fell by 41.36% year-on-year to 2.36 million tons. The
Group’s sales performance of potash fertilizers was negatively affected
because their high prices dampened market demand and demand from compound
fertilizer producers slackened due to the underproduction problems.
Nevertheless, it retained the largest market share of the potash fertilizer
sector in China. Pesticide operations were mainly carried out through its
network distribution, with emphasis put on distributors at the grass-roots
level. Farm operators and big grain-grower were also actively explored to
enhance pesticide marketing capacity.

Mr. Du Keping, Chief Executive Officer of Sinofert, said, “Despite a
downturn in the Group’s operating results in 2009, we still remain the largest
fertilizer distributor and service provider in China. After ten years of
strategic transformation, we have established a solid industrial base and an
extensive distribution network. They are important assets to us. The
distribution network is particularly essential to us because of its strategic
value, which is increasingly apparent. With a global procurement network and
strong brand power, we are confident about maintaining our competitive
advantages. All of our board members, management and staff are fully confident
about our future development.”

Production and Supply

In 2009, the Group made no acquisitions or new production facility
development. Nevertheless, the production facilities which the Group had
interests were expanded. As a result, total production capacity of the Group
increased to 10.34 million tons. Moreover, the Group enhanced its management
and technological know-how and implemented the low-cost strategy to ensure its
sustainable growth.

In order to take advantage of opportunities arising amidst the financial
crisis, the Group actively recruited technology-savvy staff with upstream
production experience, further improving its specialties in the areas of
research and development, production technology and corporate management.
Moreover, it strengthened its competitiveness through innovation. For example,
Sinochem Fuling generated revenues from the transfer of its technology. At the
same time, it sped up development of national technology centers. The Group
vigorously improved its operating efficiency and strove to conserve more
energy during the production process and to ensure safe production. Despite
the severe environment, the operating performance of the enterprises in which
the Group had a controlling stake was above the industry average.

Network Distribution

After establishing a nationwide distribution network, the Group’s focus
shifted towards the enhancement of the quality of the network and operating
performance in 2009. During the year, 26 distribution centers were added,
increasing the total number of its distribution centers to 2,036.

With an aim to expand the customer base in townships and to strengthen
operations in these areas, the Group stepped up efforts in the intrinsic
development of its distribution network. As a result, the customer base
increased to over 40,000 in 2009 with 11,000 new customers added. The
proportion of township-level customers rose further. The Group achieved sales
volume of 11.30 million tons through the distribution network, accounting for
74.24% of total sales. The growing importance of the distribution network was
clearly demonstrated by its increasing contribution to total sales.

The Group vigorously promoted an integrated approach to its distribution
centers. They provide “one-stop shopping” services to customers, including the
sale of fertilizers and agricultural pesticides. This business model proved to
be very efficient and helped the Group further strengthen its integrated sales
platform.

Outlook and Strategies

The operating environment in 2010 will brighten as the Chinese economy
emerges from the influence of the financial crisis and the global economy
gradually picks up. The Chinese government has persistently increased efforts
in tackling the “three rural issues”. As a result, China has experienced
bumper crops for many years and famers’ incomes have continued to rise. China
will also initiate a national program to increase its annual grain output by
50 billion kg this year. All these favourable conditions will provide ample
room for growth of the fertilizer sector. We believe that domestic fertilizer
demand in coming years will bounce back from the ebbs seen over the past two
years and continue to climb.

Mr. Liu Deshu, Chairman of Sinofert, commented, “In 2010 the Group will
continue to forge ahead with the strategy of ‘centering on marketing and
distribution and expanding into both production and network distribution.’ We
will strengthen our industrial base and enhance the cost competitiveness of
our products. Meanwhile, we will further promote an integrated operation
through our extensive distribution network and explore new models for network
expansion so as to better prepare for sustainable growth for the Group. We
will strive to get the most from the synergy between upstream and downstream
operations and augment our market share, thereby strengthening our leading
position in the market. We are determined to achieve our goals for this year
in order to create greater value for shareholders, greater wealth for society
and help secure the food supply and agricultural development of China.”

Background of Sinofert Holdings Limited

Listed on the Stock Exchange of Hong Kong Limited on 28 July 2005,
Sinofert Holdings Limited specializes in businesses of agriculture related
products including fertilizers. As the largest fertilizer enterprise
integrating production, supply and sales in China, Sinofert Holdings Limited’s
operating fields extends through the whole industry chain of fertilizer
including R&D, production, import & export, distribution and retail as well as
agrochemical service of the products through the growth strategy of “centering
on marketing and distribution and expanding into both production and network
distribution”. Sinofert is the flagship company of Sinochem Corporation.
Established in 1950, Sinochem Corporation is one of the largest state-owned
enterprises in the PRC in terms of turnover. Sinochem Corporation is also one
of Fortune 500 enterprises, globally dealing in business in petroleum,
fertilizer and chemicals.

This press release is distributed by PRChina Limited on behalf of Sinofert
Holdings Limited.

    For more information, please contact:

    Investor and media enquiries:
     Ma Yan
     Sinofert Holdings Limited
     Tel:   +86-10-5956-9192
     Fax:   +86-10-5956-9627
     Email: mayan@sinochem.com

     Cindy Cheung
     Sinofert Holdings Limited
     Tel:   +852-3656-1510
     Fax:   +852-2850-7229
     Email: cindy.cheung@sinochem.com

     Henry Chik
     PRChina Limited
     Tel:   +852-2522-1838
     Fax:   +852-2521-9955
     Email: hchik@prchina.com.hk

     David Shiu
     PRChina Limited
     Tel:   +852-2522-1368
     Fax:   +852-2521-9955
     Email: dshiu@prchina.com.hk

Disclaimer

This press release distributed herewith includes forward-looking
statements. All statements, other than statements of historical facts, that
address activities, events or developments that Sinofert Holdings (“Sinofert”)
expects or anticipates will or may occur in the future (including but not
limited to projections, targets, estimates and business plans) are forward-
looking statements. Sinofert’s actual results or developments may differ
materially from those indicated by these forward-looking statements as a
result of various factors and uncertainties, including but not limited to
price fluctuations, actual demand, exchange rate fluctuations, exploration and
development outcomes, estimates of reserves, market shares, competition,
environmental risks, changes in legal, financial and regulatory frameworks,
international economic and financial market conditions, political risks,
project delay, project approval, cost estimates and other risks and factors
beyond our control. In addition, Sinofert makes the forward-looking statements
referred to herein as of today and undertakes no obligation to update these
statements.

SOURCE Sinofert Holdings Limited


Source: newswire



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